The four major laws passed by Congress to address the coronavirus pandemic will boost real domestic gross product by 4.7% in 2020 and 3.1% in 2021, the Congressional Budget Office said Friday. The “wide array of conventional and unconventional fiscal policies” in the laws will also add $2.3 trillion to the deficit in the current fiscal year and $0.6 trillion in the following fiscal year, according to CBO estimates.
“By providing financial support to households, businesses, and state and local governments, the legislation will offset part of the deterioration in economic conditions brought about by the pandemic,” CBO said. “From fiscal year 2020 through 2023, for every dollar that it adds to the deficit, the legislation is projected to increase GDP by about 59 cents.”
In the long run, CBO expects the increased debt to weigh on growth, in part by driving up borrowing costs.